Up for grabs are the spectrum blocks of the two private-sector players, WIND Hellas Telecommunications SA and Vodafone Greece, a unit of Vodafone PLC.

This being Greece, what might seem like a sensible market-based move is a bit more complex, prompting outrage, and the threat of a complaint to the European Commission.

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Cosmote Mobile Telecommunications SA, Greece’s part-state-owned operator, is not seeing its block expire until 2016 and thus doesn’t face the risk of an immediate auction, and thus possibly losing its spectrum space. That, of course, doesn’t sit well with the private players, who complain of discrimination.

Also, the Greek government has set a starting price for the auction at €61.7 million per block, more than three times the €20 million the phone companies say the block is worth, as determined by studying prices in other countries and adjusting them down to account for Greece’s shrinking economy.

The auction, which was announced earlier this year, “is an indirect tax, plain and simple on Greek citizens,” says Georgios Tsaprounis, a WIND Hellas official in Brussels this week to talk to EU officials. “Consumer prices could increase three-fold. The government is not looking at the future.”

Instead of an auction, the Greek government should simply renew the licenses or hold a “beauty contest,” with each operator putting forth its merits in a formal bid, he says.

The telecom firms are contemplating filing a complaint at the European Commission, adds Mr. Trasprounis. “It’s a violation of fair competition not to renew our license.”

The Greek move reflects the country’s Catch-22. It needs the economy to grow, so it can increase tax revenue, but that won’t happen unless it can ease the cost of living and doing business for its own people.

The Greek Ministry of Finance did not make available anybody able to comment.

About Real Time Brussels

The Wall Street Journal’s Brussels blog is produced by the Brussels bureau of The Wall Street Journal and Dow Jones Newswires. The bureau has been headed since 2009 by Stephen Fidler, who was previously a correspondent and editor for the Financial Times and Reuters. Also posting regularly: Matthew Dalton, Viktoria Dendrinou, Tom Fairless, Naftali Bendavid, Laurence Norman, Gabriele Steinhauser and Valentina Pop.